IRS Publishes new Method for Non-Foreign Financial Entities to Comply with FATCA

On October 29, the IRS published Notice 2013-69 (the Notice) which provides guidance to Foreign Financial Institutions (FFI’s) seeking to enter into FFI Agreements with the Internal Revenue Service (IRS) to comply with their Foreign Account Tax Compliance Act (FATCA) obligations. While the majority of the Notice is dedicated to providing a draft FFI Agreement, which is some 37 pages long, the Notice also creates a new category – the direct reporting Non Foreign Financial Entity (NFFE).

NFFE’s will now have the choice to register directly with the IRS and report any substantial US owners directly to the IRS, instead of reporting them to the withholding agent. While this change does not alter which US owners must be reported, it does give the NFFE’s the ability to keep their US owners private from everyone except for the IRS.

The process for NFFE’s to report their substantial US owners is not yet available. The Notice indicates that the IRS will issue additional regulations in the future, but it is not clear when the regulations will be published. According to the Notice, there will be a process for the NFFE’s to register with the IRS and receive a Global Intermediary Identification Number, just like FFI’s.